Allison Transmission (ALSN) Q1 2026 earnings summary

Executive summary

• Net sales reached $1,406 million in Q1 2026, up 84% year-over-year, driven by the acquisition of the Off-Highway business unit, which expanded operational flexibility and global reach.

• Integration of the Off-Highway business is progressing as planned, with initial synergy realization underway and $120 million in annual run-rate synergies targeted for later in 2026.

• Adjusted EBITDA rose 22% year-over-year to $362 million, with a margin of 26%, and adjusted diluted EPS increased 6% year-over-year to $2.57.

• Net income declined to $112 million from $192 million year-over-year, reflecting acquisition-related costs and higher interest expense.

• Continued focus on shareholder returns through dividend increases and share repurchases.

Financial highlights

• Q1 consolidated net sales: $1.406 billion, with Allison Transmission at $733 million (down 4% YoY) and Off-Highway at $673 million (up ~10% YoY).

• Adjusted net income: $216 million; adjusted diluted EPS: $2.57, up from $2.43 YoY.

• Adjusted EBITDA: $362 million, up from $296 million YoY; adjusted EBITDA margin: 26%.

• Gross profit was $406 million, up $28 million YoY, but gross margin declined to 29% due to acquisition expenses.

• Net cash from operating activities was $156 million; adjusted free cash flow was $103 million.

Outlook and guidance

• Full-year 2026 guidance reaffirmed: consolidated net sales of $5,575–$5,925 million, adjusted EBITDA of $1,365–$1,515 million, and adjusted free cash flow of $655–$805 million.

• Net income expected at $600–$750 million, including over $100 million in one-time pre-tax acquisition-related expenses.

• Capital expenditures projected at $295–$315 million, including $45 million in one-time integration costs.

• Off-Highway acquisition expected to be accretive to net income and EPS in 2026.

• Expected recoveries in key end markets and synergy realization are anticipated to drive higher adjusted EBITDA margin.